Mary Jo White, chairman of the U.S. Securities and Exchange Commission. The agency, often bashed for its lack of technological savvy, is one of only two financial regulators that rely on Congress for their annual funding. (Andrew Harrer/Bloomberg)

Congress snatched away half of the $50 million that the Securities and Exchange Commission had set aside for technology initiatives Thursday, dashing the agency’s hopes of beefing up the tools it needs to swiftly spot violations such as illegal trades and accounting fraud.

The decision, included in a ­massive spending bill, was a setback for the Wall Street regulator as it struggles to keep up with a market dominated by high-speed traders and avoid the type of oversight lapses that allowed Bernard Madoff’s Ponzi scheme to go undetected for years.

The agency, often bashed for its lack of technological savvy, is one of only two financial regulators that rely on Congress for their annual funding. It has been operating on a tight budget subject to the whims of lawmakers, making it difficult for the regulator to commit to technology projects long term or upgrade existing ones, agency officials have said.

To address those concerns, Congress directed the SEC to set up a $50 million reserve fund for multi-year projects, and the SEC has devoted the money to technology since late 2011.

But this week, when Congress unveiled the government’s spending plan for the year, lawmakers rescinded half of the technology money. They did not offer a reason why, though the agency’s critics have long pressed for ways to cut SEC spending.

Now the regulator must decide how to scale back, at least for this year. Agency officials declined to comment on which initiatives might suffer.

Among the SEC’s most ambitious undertakings is software that streams real-time trade data. The technology enables the SEC to reconstruct market events, a need that became clear after the 2010 “flash crash” in which the Dow Jones industrial average plunged before bouncing back in minutes. It took the SEC four months to unwind the billions of orders that took place that day and determine what happened.

The money for that project came from the $50 million fund, agency officials said.

More recently, the agency began using software that scans the financial statements companies file, assesses risk factors and generates a score that identifies outliers within a peer group. The SEC also wants to enhance a system that flags potential insider trading by identifying individuals who trade in unison around certain market events, and another that aims to combat hedge fund fraud by sniffing out unusual fund performance.

Andrew Ceresney, director of the SEC’s enforcement division, said these types of technologies help investigators make connections they may have otherwise missed.

“The technology is of high value,” Ceresney said. “Several insider trading cases that we’re currently investigating were developed because of the technological advances we have recently made.”

Vincent Morris, communications director of the Senate Appropriations Committee, said in ­e-mails that the “SEC has as much tech money as it needs” and that the agency’s leaders “should feel confident that they have sufficient revenue to carry out their technology mission.”

Aside from the reserve fund, the agency has other money in the spending bill for ongoing technology expenses, such as computer upgrades. It got short shrift, however, in its overall budget.

It requested $1.67 billion for the fiscal year ending Sept. 30 but is receiving $1.35 billion if the budget is enacted. The amount is slightly higher than what the agency received last year, though not close to the level it says it needs to address its top priorities.

The SEC asked for more staff to cope with new responsibilities under the Dodd-Frank Act and another relatively new law designed to help fledgling firms grow. The agency also cited a severe shortage of examiners. Last year, it examined only 9 percent of the 11,000 investment advisers it regulates.

“It is particularly frustrating considering that funding for the SEC does not contribute to the federal deficit,” agency spokesman John Nester said in a statement.

Each year, the agency collects fees from Wall Street that match the funding it gets from Congress, which makes the SEC “deficit neutral.” Many agency commissioners have pushed to have the agency fund itself, as most other financial regulators do, said Larry Harris, a professor at the University of Southern California.

“This has been on the SEC’s wish list from the beginning,” said Harris, former chief economist at the SEC. “But Congress is not about to give up its control.”

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